Accept ACH Payment Processing Online

August 13, 2021

Accept ACH Payment Processing Online

Your Guide to ACH Online Bill Payment 

ACH offers business owners powerful benefits over traditional payment methods, and one of the biggest is cost. You will save more money per transaction than a credit card, debit card, or wire transfer transaction, putting more money in your pocket. 

The most common way of taking ACH payments is online, but how do you do it? In this article, we review how to accept ACH payments online so you can experience the benefits of ACH as quickly as possible.  

Accept ACH Payment Processing Online  

Here are the steps to accept ACH payments online: 

Step #1: Determine If ACH Payments Work for Your Type of Business 

ACH offers powerful benefits, but it won't work for non-US-based merchants. International merchants can't access the network, and this includes Canada. 

Step #2: Open An ACH Merchant Account  

An ACH merchant account is a special bank account that sends and receives ACH electronic payments. With it, you can withdraw money from a customer's account as a one-time payment or at a frequency you and your customer determine. You can set up your merchant account through your bank or through an independent sales organization, also known as a member service provider or payment service provider (ISO, MSP, or PSP).  

If you already have a provider for running credit card payments and debit card payments, they may be an easy option, but determining which provider is best means weighing the cost benefits of each. In some cases - especially for smaller-volume ACH transactions - a bank may not have any account charge for ACH, making it a strong choice. 

When collecting pricing from a service provider, be sure to review the cost of recurring billing. Not all providers offer it for free. Also, be sure to select a merchant services company that has Payment Card Industry Data Security Standard (PCI DSS) certification and offers fraud and chargeback prevention. 

The good news is whichever provider you choose, you can both receive and forward payments. This includes any B2B transactions or payroll to your employees. Direct-deposit payroll is a form of ACH.  

When you have chosen your provider and open an account, you will need to provide information such as your federal tax ID, how long your business has been active, and an estimated volume of transactions. Once the information is provided, approval takes only a few days. 

Step #3: Step 3: Request Authorization of Funds 

Once your account is set up, you will need the customer to fill in an application form with bank details connecting you to their bank. Applications for funds transfer come in printed form that can then be filled in by the customer or by you over the phone, or you can offer an online payment form. BNG Payments can provide you with authorization form templates.  

Online authorization makes it easy for customers to provide banking details at their leisure. If you do a lot of online business, it also attracts customers to ACH while the iron is hot, increasing the chance of ACH signups. These benefits have made online payments the most popular option.  

Step #4: Set Up Payment Details  

What Information is Needed to Receive an ACH Payment? 

With the authorization form complete, the customer will need to provide their checking account and routing number and may be required to provide additional information to verify their identities, such as an email or phone number. 

Step #5: Choose an ACH Payment Method 

Your customer will indicate the payment amount and if it is a one-time ACH payment or recurring. If it is recurring, the customer will need to approve the payment frequency, such as regular monthly payments. Be sure to offer flexible payment options to increase the chances of participation. 

Step #6: Submit the Form 

Once the information and permission are completed, click "Save" or "Submit." 

Common Questions Customers Ask about ACH Payments 

Here are questions that often come up ACH Payment Processing:

What is the ACH Network? 

ACH stands for Automated Clearing House, an electronic network of banks that conducts real-time bank-to-bank money transfers. The network is exclusive to the United States, offering a supplementary payment option of direct payments with benefits of low-cost transactions and regular automatic payments capability. Each electronic funds transfer (EFT) works like a check, cash, or wire transfer in that payment runs bank-to-bank, but unlike credit card payments, which use a third-party processor in their credit card networks.  

How Long Does ACH Take to Clear? 

ACH Credit transactions (funds sent by the customer) must be processed and delivered within one business day or in one or two days. An ACH debit transaction (funds pulled from the customer by you) must be processed the next business day. It's important to note that your receiving bank may hold the funds for verification, and transactions must be initiated and completed during bank hours. These factors make the average total timing 3-5 days. Same-day transfers are available, but again, bank hours apply. 

What are the Benefits of ACH Payment Processing? 

 Low Transaction Fees 

"How Much Do ACH Transfers Cost? And Does Free ACH Processing Exist?  

A chief benefit of ACH is the price. These types of transactions are free for customers and significantly less expensive for you than credit card transactions, debit card transactions, and wire transfers. If your bank charges for check deposits, it's even cheaper than a check. Additionally, your bank may not charge for the service. Some ACH processing is included in the monthly bank fee, and this includes mobile deposits, but limits apply. For high-volume US merchants experiencing strong cash flow, there is often a fee for service. Still, ACH is cheaper than credit cards and wire transfers.  

Some ACH payment processors charge a flat transaction rate between $0.25 to $0.75 per transaction. Others charge a flat rate percentage of around 0.5 % up to 1%. A provider may also charge a monthly fee. Still, all this pricing is far cheaper than a credit card transaction of between 1.5% and 3%, plus a processing fee ranging from $0.10 to $0.30.  

ACH Works Directly with Your Accounting Software  

ACH accounting software can inform customers of upcoming payments and process payments automatically, eliminating the need to manually generate electronic invoices and receipts via email or mail paper documents. Plus, having the work done automatically reduces billing errors that can create a significant accounting hurdle. If you run large quantities of orders frequently, ACH saves you and your accounting team valuable time, so you can concentrate on business growth.  

As a payment processing solution provider, BNG Payments can assist you with setting up your software, so it works together with ACH.  

Regular and Reliable Billing Schedule 

Automatic payments on a regular billing cycle bring you steady and reliable income to keep your business running smoothly. You and your customers still have the option of custom billing configurations for size and frequency, but billing customers through ACH means you know when you are paid, creating a solid business foundation. 

Larger Payment Capability 

ACH accepts larger dollar amounts as high as $25,000. You won't be restricted to the lower thresholds of credit cards or suffer the long wait times of check approvals for high dollar amounts. 

Increased Safety 

Thanks to ACH instant funds verification, you know there are sufficient funds on hand to process payment. Checks can bounce while the customer still has access to your products or services. You also avoid fraudulent transactions since checks can be stolen and forged. These reasons have made ACH a strong alternative to the traditional paper check. 

What Are the Drawbacks of ACH Payment Processing?  

"Are There any Penalty Fees with ACH payments?" 

Rejected payments are most often due to issues created by the customer, such as insufficient funds, a closed bank account, the account can't be located, or the customer's bank doesn't permit you to withdraw funds from the account.  Even though the customer is the cause of most issues, you can still be charged a fee for rejected payment. Be sure to promptly correct issues to avoid higher transfer fees in future billing cycles, but you can prevent problems from the start by offering the ACH payments option to trusted customers. Even then, be sure to regularly check your account to avoid ongoing chargeback fees or non-sufficient fund (NSF) fees.  

Customers, however, aren't the only problem. High-risk merchants are charged a higher rate and can also face a termination charge if issues persist. 

How Do I Accept ACH Payment in QuickBooks online?  

Since QuickBooks is a popular accounting software, here's how you do it online: 

  1. While in QuickBooks, click the gear menu and click Company Settings located inside the Settings category. 
  1. To set up a customer, click Payments and then Learn More. 
  1. Choose a payment plan and input the necessary data (i.e., bank account information) 
  1. Click the "+" at the top of the invoice and click Invoice to provide payment options. 
  1. Enter all required information and select the online payment option you offer. 
  1. Enter the credit card information of the customer. 

Incorporate ACH Payments into Your Business 

Connecting your terminals and website to the ACH network can be done easily and quickly with the help of a merchant services provider. Here at BNG Payments, we do this work often, ensuring you have a reliable and easy-to-use system that coordinates with your onboard accounting software. You can easily set up customers with ACH on any device, including your website, and generate invoices, receive payments, and provide receipts automatically. 

We know first-hand how powerful ACH payments are in maximizing profit and creating a more stable business foundation. We can ensure it functions as it should while keeping you fully compliant with ACH rules. To learn more, contact us here.